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Stocks rally but this bull sees more pain ahead

Stocks opened slightly higher Monday following a big beating last week that left the Nasdaq (IXIC) down 3.1%, its biggest weekly percentage decline in almost two years. The Dow (^DJI) slipped 2.4% last week.

The major averages could fall even further says David Nelson, chief strategist at Belpointe Capital.

Nelson admits the carnage that started with those names and other so-called momentum stocks like Facebook (FB), Tesla (TSLA), Twitter (TWTR) has "bled over." Case in point: Gilead (GILD), a biotech stock that got "pummeled" but looks cheap based on a P/E using next year's earnings, which is in the low teens, says Nelson.

He attributes last week's rout not only to a rotation out of momentum stocks but also selling by big hedge funds.

"I gotta believe a lot of this selling is coming from them," says Nelson. "If you wanted to make money in the last couple of weeks you sold what was up and bought what was down. You turned your model upside and you probably outperformed."